Serco, which runs prisons, schools and nuclear facilities for the
Government, has been attacked for the manner in which it conducts
negotiations with suppliers. Last week, the company was forced to
apologise for demanding cash rebates from its biggest suppliers in an
attempt to help it deliver the Government's cost savings.

According to reports, Serco's stance angered Cabinet Office minister
Francis Maude because the Government had agreed with Serco that the cuts
would come from its own profit margins, rather than those of suppliers
and sub-contractors.

This week, it emerged that Serco had contacted leading public affairs
firms, asking them to send in credentials. The firm is planning to hold
a pitch at the end of November, with UK director of government relations
Stephanie Elsy overseeing the process. Serco is understood to be
preparing to hand out a substantial retainer.

Serco has previously used Fleishman-Hillard for UK public affairs, but
the agency's head of public affairs Nick Williams said it had not worked
with Serco in months and that it had previously worked on a 'very
specific issue'. He did not say whether F-H would be pitching for the
new business.

Last week's news wiped almost eight per cent from Serco's share price in
two days.